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Market report - afternoon update
Make the most of falling oil prices and filling up at the pumps on the cheap — it could be all about to change again the New Year.
That seems to be the word in the futures market, where investors dumped the expiring January Nymex contract on Friday, sending prices plunging to just under $34 a barrel. It happened after inventories rose to a 19-month high at the place where Nymex stores oil, making it tougher to take delivery on barrels bought under January contracts.
By contrast, oil for February delivery, rose 69 cents to $42.36 a barrel on the New York Mercantile Exchange as Opec repeated threats to carry on cutting output. Dealers insist such a wide gap between consecutive monthly contracts is unusual, and points to the continuing rally in the oil price in the New Year. After hitting a record $147 a barrel in July, crude contracts have tumbled 76%. Saudi Arabia has repeated its assertion that an oil price of $75 would be fairer.
Any price increase will be good news for Cairn Energy, which is already sitting on more than 1.3 billion barrels in Rajasthan. Its shares rose 106p to 1954p today after it said it had made a new discovery, near its existing field in the west of the country. The price has come up from the 1179p since the start of October. Also moving better was BP, up 7p at 512p, and Royal Dutch Shell, 12p ahead at 1739p.
The year-end squaring-up of the books by institutional investors is now under way, and has been likened to giving a corpse the kiss of life. “It has been one of the worst years for stock-market investors in living memory, and most of us now just want to draw a line under things,” said one exasperated trader. “But there is no likelihood that things will improve next year.”
Shares generally rallied from opening falls, with the FTSE 100 index posting a rise of 8.4 points to 4278.4 in exceptionally thin trading conditions. Wall Street made a lacklustre start this afternoon, the Dow losing less than two points at 8577.3.
Financials made much of the running, with asset manager Schroders adding 43p to 685p and life assurer Friends Provident up 4.6p at 81.6p.
Moving in the opposite direction were the retailers as they faced up to bleak Christmas and New Year trading. Home Retail, which includes Argos, fell 28¾p to 205¾p, Marks & Spencer was down 11½p to 214¼p, and B&Q DIY retailer Kingfisher was 5.9p cheaper at 133.5p. Retail analyst Nick Bubb at Pali International says discounting and bankruptcies by the big retailers will get worse in the New Year.
On AIM, shares of Sareum Holdings resumed trading down 0.02p at 0.125p. They were suspended on 8 July because of the uncertainty created by a lack of funds. The cancer-drugs group has since disposed of most of its equipment assets, but retained the intellectual property of its drug programmes.
Also on AIM, shares of Pure Wafer rose 1.5p to 6.5p after a bid approach. The group, which provides silicon-wafer reclaim services, is valued at about £1.5 million.
